California, USA — ExxonMobil has filed a federal lawsuit against the State of California, challenging two landmark climate disclosure laws that require large companies to report their greenhouse gas emissions and climate-related financial risks publicly.
In a complaint filed in the U.S. District Court for the Eastern District of California, Exxon argued that Senate Bills 253 and 261 violate its First Amendment rights by compelling Exxon to “serve as a mouthpiece for ideas with which it disagrees,” and asked the court to block the state of California from enforcing the laws.
Exxon said the laws force it to adopt California’s preferred frameworks for climate reporting, which it views as misleading and counterproductive. The oil giant said it already reports emissions and climate risks voluntarily, and objects to California’s frameworks.
Democratic-ruled California has long had some of the strictest environmental rules, including vehicle fuel-efficiency standards and planning policies, following the passage of a climate change law in 2006.
California passed two laws in 2023 that would require companies to report their greenhouse gas emissions and climate-related financial risks publicly.
The California laws were supported by several big companies, including Apple (AAPL.O), Ikea, and Microsoft (MSFT.O), but opposed by several major groups, such as the American Farm Bureau Federation and the U.S. Chamber of Commerce, which called them “onerous.”
SB 253 requires public and private companies that are active in the state and generate more than $1 billion in annual revenue to publish an extensive account of their carbon emissions starting in 2026.
The law requires disclosure of both companies’ own emissions and the indirect emissions of their suppliers and customers.
SB 261 requires companies operating in the state with over $500 million in revenue to disclose climate-related financial risks and the strategies they use to mitigate them.
Exxon also argued that SB 261 conflicts with existing federal securities laws, which already regulate what publicly traded companies must disclose regarding financial and environmental risks.
“The First Amendment bars California from pursuing a policy of stigmatisation by forcing Exxon Mobil to describe its non-California business activities using the State’s preferred framing,” Exxon said in the lawsuit.
According to Reuters, the California Department of Justice and the California Air Resources Board did not immediately respond to a request for comment.